Lisa Chen, CFA
Investment Analyst · April 28, 2026
Roth conversions have become the default recommendation in personal finance media, financial advisor marketing, and retirement planning books. The logic is appealing: pay taxes now, let the money grow tax-free, and avoid Required Minimum Distributions later. For some clients, this is excellent advice. For others, a Roth conversion is a mistake that increases their lifetime tax burden. The math matters, and it's client-specific.
A Roth conversion makes sense when your current marginal tax rate is lower than your expected future marginal rate. This is most often true for people in the early years of retirement — after they've stopped working but before Social Security, RMDs, and pension income have fully kicked in. During this window, many retirees are in a lower bracket than they'll be in their late 70s, making it an opportune time to convert pre-tax IRA funds to Roth. The tax you pay today is lower than the tax you'd pay later.
A Roth conversion makes less sense when you're currently in a high tax bracket with no expectation of lower rates in retirement. If you're in the 32% or 37% bracket now and expect to be in the 22% or 24% bracket in retirement (because your income will drop), converting pre-tax funds now means paying taxes at a higher rate than you'd face by simply withdrawing the money in retirement. The conventional wisdom gets this backwards for a meaningful segment of the working population.
The interaction with state taxes, Social Security taxation thresholds, Medicare premium surcharges (IRMAA), and the 0% capital gains bracket complicates the math further. We model Roth conversion scenarios for every client who has significant pre-tax IRA balances, and we revisit the analysis annually as tax law and their circumstances change. The right answer is almost always found in a spreadsheet, not in a blanket recommendation.
Disclosure: This content is provided for educational and informational purposes only and does not constitute investment, tax, or legal advice. Past performance does not guarantee future results. Consult a qualified advisor before making financial decisions.
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